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Three Things HR Professionals Should Consider Before Implementing Multi-Rater Performance Evaluations, and Eliminating Numeric Performance Ratings in Favor of Open-ended Textual Comments
27 March 2017

As a means of reducing the perceived burdens managers face in managing the employee performance planning, coaching and evaluation process, organizations are turning to multi-rater performance evaluations. For example, an employee is asked to choose 3 fellow employees to provide performance feedback and ratings, and the employee’s manager chooses 3 additional raters. Ratings from both groups are averaged to determine the employee’s actual overall performance rating. This approach is intended to reduce managerial time and provide greater objectivity, but it can create potential problems for HR professionals.

Organizations are also eliminating numeric performance evaluation ratings and replacing them with open-ended textual comments. The intent is to provide rich commentary that supports feedback and professional development discussions unencumbered by the emotional baggage that accompanies numeric ratings. Lack of quantified performance measurement makes comparisons between employees more difficult because the meaning of words used in textual comments can vary by manager.

HR professionals should consider the practical and legal issues of these approaches before adoption and determine if they actually produce the intended benefits, or create added potential problems.

1. Conflicting Multi-Rater Ratings Can Cause Potential Problems – Dealing with a problem-employee situation requires sufficient and consistent documentation demonstrating a pattern of poor employee performance to support disciplinary actions, such as placing an employee on warning or ultimately terminating the employee. Conflicts in raters’ perceptions can cause difficulty for HR when positive feedback and high ratings submitted by raters friendly to an employee contrast with ratings of raters who supervise the employee. Resolution of a problem-employee situation can be impeded by conflicting ratings. Take care to design a rating process that produces objective evaluations that are unencumbered by personal relationships.

2. Textual Comments Alone Vary in Quality and are Subject to Differing Interpretation – Manager’s textual comments regarding an employee’s performance are extremely valuable for feedback and coaching purposes, but companion numeric ratings help to quantify and standardize textual comments by using a common scale that enables performance comparisons.  Open-ended comments can make a manager’s evaluation task easier by writing a description of the employee‘s performance – accomplishments, strength, weaknesses, etc.  Ultimately, however, HR has to make sense of the commentaries and compare the performance of all employees. Some, but not all, managers are capable of accurately describing employee performance in ways that support HR’s efforts to understand the organization’s talent. However, applying a universal quantified scale of numeric ratings is more helpful to HR and fairer to employees.

3. Measurement is Essential for Business Success – If you can’t measure it, you can’t manage it.  Only by using numbers can the finances of a business be understood and controlled. The same holds true for managing human capital.  In order to manage the workforce strategically HR needs to define the roles necessary to execute the business strategy in terms of the skills, knowledge, and competencies required for job success, as well as the performance expectations of every job. These data points can be incorporated into the performance evaluation process to quantify the actual performance achieved and the competency levels of the workforce to perform their roles. Like financial performance, workforce performance must be measured in order to identify development needs, risks and vulnerabilities in the talent pool, and determine whether employees’ performance levels equate with the organization’s planned financial objectives.

In order to retain top performers merit increases need to reflect differences between poor, average and exceptional performance. Planning the merit increase budget and awarding individual merit increases require quantifying employee performance.  Don’t risk losing top performers by creating a performance evaluation process that lacks measurement and quantification of employee performance.

Lastly, as HR professionals struggle to address manager dissatisfaction with the design of current performance evaluation systems that require commitment of time and the pressure of rating employees’ performance, consider whether the sources of dissatisfaction are best resolved by changing the process, or by enhancing manager training.  Most managers dislike performance evaluation because they are unskilled and uncomfortable managing employee performance. Train them in the skills needed to confidently plan, coach and evaluate employee performance and complaints about the process will diminish.
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